Quantitative Economics: Nov, 2013, Volume 4, Issue 3

Elicited beliefs and social information in modified dictator games: What do dictators believe other dictators do?

Nagore Iriberri, Pedro Rey-Biel

Using data from modified dictator games and a mixture-of-types estimation tech-
nique, we find a clear relationship between a classification of subjects into four
different types of interdependent preferences (selfish, social welfare maximizers,
inequity averse, and competitive) and the beliefs subjects hold about others’ dis-
tributive choices in a nonstrategic environment. In particular, selfish individuals
fall into false-consensus bias more than other types, as they can hardly conceive
that other individuals incur costs so as to change the distribution of payoffs. We
also find that selfish individuals are the most robust preference type when repeat-
ing play, both when they learn about others’ previous choices (social information)
and when they do not, while other preference types are more unstable.
Keywords. Interdependent preferences, social welfare maximizing, inequity
aversion, belief elicitation, social information, experiments, mixture-of-types
models.
JEL classification. C72, C91, D81.

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